Tuesday, 18 July 2017

The market lowered the general expectations of a sooner rate hike.

After Yellen's testimonial and the latest weak data of US statistics, the market lowered the general expectations of a sooner rate hike in the United States. Now this week's, ECB meeting is the main event in the market focus. We expect some increased volatility in the equity markets, however we do not expect that Draghi will make any hint on a soonest slowdown in the asset purchase program as inflation is still lower than regulator target. Despite this, pressure on the dollar is likely to remain, though we stay on guard of possible expected EUR/USD and gold correction.

EURUSD

In General

EUR turned out to be stronger in the shortest term as we expected and almost reached 1.1600. However, the market is overheated as well as ECB meeting eyed which makes this market highly risky

Fundamental

USD dollar is to remain under pressure. Trump’s difficulties with the Congress persist as US Senators are getting ready to vote against Healthcare Bill, confirming that the bill will not succeed in nearest time.

Technical

The pair is overbought and we expect profit taking and correction right after Draghi’ press conference. The main support remains at 1.1495. 1.1610-1.1615 is the resistance zone.

Recommendation

Out of the market

We have to note that longs in current conditions (1.1562) look dangerous.

USDJPY

In general

USD/JPY reversed and declined to 111.80 right after Yellen testimonial as traders lowered expectations for sooner rate hike

Technical

The support zone is around 111.30-111.90 and there might be a kind of corrective upward impulse. However, the downward impulse looks strong.

Recommendation

Careful longs at 111.65-111.70 with shorts stops

Crude Oil

Fundamental

July 24 OPEC meets in St. Petersburg, and therefore there is a good chance that efforts to bring Libya and Nigeria into a common system of production quotas can be implemented.

Technical

Yesterday Brent corrected from an important level of $ 49 per barrel but already today the market is set to break higher this level. Today, in the focus: weekly data from the API, tomorrow there will be official data from the US Department of Energy. Until the end of the week, the market can gain to levels of 51 dollars per barrel.

Recommendation

Longs once market settle above $49

This trading analysis is for informational purposes only and is not intended to be a strict recommendation for action or an offer for the purchase or sale of any currency, future or stock. Publishing the information we do not try or to attract any funds or deposits. We share our analytical view of current market situation and we don’t have any open position in instruments discussed and no plans to open any positions. Any person considering this research should carefully consider the risks associated with this and the level of trading experience.